The IRS has determined that any person required to pay Federal gift tax or generation-skipping transfer tax or to file IRS Form 709 (United States Gift and Generation-Skipping Transfer Tax Return) on April 15, 2020, is deemed to be affected by the COVID-19 emergency and, so, should be granted an extension of time within which to file such returns and to pay the related tax.
Specifically, the due date for filing Forms 709 (United States Gift and Generation-Skipping Transfer Tax Return) and for making payments of Federal gift and generation-skipping transfer tax that would otherwise be due on April 15, 2020, is automatically postponed to July 15, 2020. See IRS Notice 2020-20.
This relief is automatic; in other words, there is no requirement to file IRS Form 8892 (Application for Automatic Extension of Time to File Form 709 and/or Payment of Gift/Generation-Skipping Transfer Tax) in order to obtain the benefit of this filing and payment postponement until July 15, 2020.
However, a taxpayer may choose to file an application for extension by July 15, 2020, in order to obtain an extension to file Form 709 by October 15, 2020. Please note, however, that any Federal gift and generation-skipping transfer tax liabilities reflected on such returns, the payment of which has been postponed by Notice 2020-20, will still be due on July 15, 2020.
As a result of the postponement of the due date for filing Forms 709 and for making Federal gift and generation-skipping transfer tax payments from April 15, 2020, to July 15, 2020, the period beginning on April 15, 2020, and ending on July 15, 2020, will be disregarded in the calculation of any interest, penalty, or addition to tax for failure to file a Form 709 or to pay Federal gift and generation-skipping transfer taxes shown on that return and postponed by the Notice.
Instead, interest, penalties, and additions to tax with respect to such postponed Forms 709 and payments will begin to accrue on July 16, 2020.
One lingering question: What about the Federal estate tax? Unfortunately, the normal filing and payment due dates continue to apply to the estate tax.
If you would like to discuss how the $2 trillion CARES Act affects you, your family or your business, please do not hesitate to contact Lou Vlahos, Tax Partner at Farrell Fritz or your Farrell Fritz Relationship Partner.
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